There was an article published on July 7, 2026 with the title “Average new car payment reaches all-time high as affordability issues persist”.

Auto loan debt rose 57.3% from a decade earlier, but we have had a lot of money creation at the Fed to account for.

The stunning part for me was that the average monthly car payment is now a record $770 per month.  This is unbelievable.  That is around what my mortgage payment is if you don’t count insurance and taxes.

This is the average, so it would be swayed higher by really expensive car payments.  Still, it is not like there are a lot of Lamborghinis out there driving up the average.  The median car payment is probably not all that much lower than this amount.

Average monthly payments for a used car now stands at $531.  This is quite a staggering amount for vehicles that are already used and some of which don’t even have a warranty or may have a very limited warranty.

To be fair, this doesn’t account for people who just pay cash for a car.  But these tend to be the people who are in good shape financially.  And this leads to the bleak picture of those who are getting big car loans.

Sub-Prime

The article points out that “nonprime borrowers” – those with a credit score in the range of 601 to 660 – account for the group with the highest average auto payment of $811 per month.

Sub-prime borrowers (credit score of 501 to 600) are not far behind this group with an average of $792.

Meanwhile, the super-prime borrowers (781 to 850) had the lowest monthly payment of $753.

This tells us several things.  First, even though we are in a really tough economy, and we can place that blame on the government and central bank, we still have to acknowledge that some people are in the position they are in because of bad choices.

Most people just need a car to get from A to B.  Maybe some construction workers need a big pickup truck.  Maybe some people need a nice car if they have to drive clients around.  But for the majority of people, they just need the transportation.

It is ridiculous that someone with bad credit would be buying a car that requires a monthly payment in the neighborhood of $800 per month.  You can still buy a new car for under $25,000, although there aren’t a lot of them these days.  It is quite realistic to buy a new car and have a monthly payment under $500.

Another thing these statistics tell us is that there is a large segment of the population that is vulnerable to an economic downturn.  They are already struggling.  If unemployment goes significantly higher, or even if interest rates go higher, some of these people are no longer going to be able to meet their obligations.  If there is any kind of financial crisis like 2008, we are going to see a major spike in defaults.

The Misallocated Economy

The fact that sub-prime borrowers and non-prime borrowers have the highest monthly auto payments is representative of the economy we are in.  The rich get richer, while the poor keep getting buried deeper.

This is, of course, a generalization.  And as discussed, some of this is due to choices.  The people with money keep making good decisions, which is largely the reason they have money in the first place.  The people without money keep making bad decisions.

Still, I can’t help but sense that this is more pronounced than normal.  The economy is working for some Americans, while it is most definitely not working for others.  And even if it is seemingly working for some, most people would be vastly better off if the government were a fraction of its current size and if the Fed kept a relatively stable monetary policy.

The higher car prices, the higher interest rates, and the all-time high monthly payments are representative of this economy.  And for both, something has to give.  The current trajectory is unsustainable.

The average car payments is depressing enough on its own.  Unfortunately, it paints a bigger picture that needs to be addressed.  We need less debt, drastically lower government spending, less government regulation, and a central bank that doesn’t inflate like crazy.  Even better, we could have no central bank and let the market take care of our money and interest rates.